Shared Value

Photograph by Joanne Ratajczak

I

ain Rankin and Viive Tamm

Co-Founders, Tamm Communications inc., Toronto

Viive Tamm and Iain Rankin weren't looking to sell their advertising agency, Tamm Communications Inc. (TCI) in 2007. But when a larger agency wanted to discuss the possibility, the husband-and-wife team listened.

While they didn't sell, the experience got the couple thinking about how they would exit the business when the time came. So, they began researching various options and settled on a mechanism that will intrigue other middle-aged owner/managers.

"I just couldn't see leaving them high and dry," says Tamm, about her close-knit group of employees. Instead, Tamm gave them the opportunity to acquire up to 49% of the firm.

Rolled out in 2009, TCI's voluntary employee share-ownership program (ESOP) allots shares to individuals according to their importance and contributions to the business. Because the share allotments must be acquired on an all-or-nothing basis, TCI offers interest-bearing loans to those unable to fund their purchase. A block of shares was held back to allow future employees to buy into the program.

The partial employee buyout has allowed Tamm and Rankin to convert some of their hard-built equity into cash without seeking an outside buyer. What's more, the ESOP has made employees feel—and act— like owners. The firm's valuation is up by 40% since the ESOP's start.

The couple remained fixtures at the firm in the first year of the ESOP, but now spend most of their time at their cottage north of Toronto. (A new creative director runs the business day to day.) And although Tamm and Rankin still hold 51% of the firm, they expect staff to buy them out eventually. "That will be a wonderful day for us," says Tamm, "because it will mean they have come of age, so to speak."